This probably disturbs HP more than the endless Oracle taunting
Chief Executive Officer Larry Ellison is phasing out lower- margin products from Sun, acquired last year, to wring more profit from high-end hardware. A boom in demand for Oracle’s databases used in cloud computing -- the delivery of software and storage over the Internet -- also contributed to a 29 percent gain in new license sales, an predictor of revenue.
When Oracle, the largest supplier of database software, purchased Sun, analysts fretted that its margins would be squeezed by the addition of less profitable hardware. Oracle Co- President Safra Catz took pains to allay that concern on the conference call, saying gross margin in the hardware unit rose to 55 percent last quarter from 53 percent the previous quarter. It will continue to rise in coming periods, she predicted.
“It’s becoming clear that we’re going to be able to ultimately bring the margins very close, if not even more than they ever were when we were just a software business,” Catz said. “We still think there’s actually quite a bit of room.”